Bitcoin's price has seen a notable increase in the past week. The rise has been driven in some part by anticipation over the possible approval of multiple spot bitcoin ETF filings.
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This is a retrace from a brief spike to $30,000, that was reached on Monday, after a false report inaccurately asserted that BlackRock's proposed spot bitcoin ETF had gained approval. The report by Cointelegraph caused a surge in trading activity and volatility. While bitcoin pulled back after the report was debunked, it has still gained throughout the week, closing in on $29,000 on Wednesday.
Analysts view the false alarm at the beginning of the week as a dress rehearsal for what would occur if a spot bitcoin ETF were actually to be approved. In the past week, indications that the US Securities and Exchange Commission (SEC) will approve a spot bitcoin ETF have been increasing.
Signs of an spot bitcoin ETF approval escalate
In late August, a panel of judges at a US appeals court ruled that the SEC had made an error when rejecting Grayscale Investments' application to convert the Grayscale Bitcoin Trust (GBTC) into a spot bitcoin ETF. The judges said the agency’s decision was “arbitrary and capricious."
Last Friday, the US regulator opted to not challenge the court ruling, a decision that analysts suggest increases the changes for the Grayscale Bitcoin Trust to be converted into an ETF.
Since then communication between fund managers and the SEC regarding spot bitcoin ETFs has become more constructive, according to Bloomberg analysts James Seyffart and Eric Balchunas.
"A recent update to the spot bitcoin ETF prospectus from Ark and 21SHares adds at least five pages of new text, signaling a constructive conversation with the SEC, and a step that typically only occurs when a fund is on its way to being approved," Seyffart and Balchunas noted.
According to a Bloomberg report on Saturday, the analysts added that communication between Grayscale Investments and the SEC "is going to open up" following the regulator's decision not to appeal the court ruling.
Fund managers give their approval to bitcoin
After Monday's false report of a spot bitcoin ETF approval, BlackRock (BLK) CEO Larry Fink spoke in favourable terms about digital assets in an interview with Fox Business. He indicated that the market's response to Monday's false report exposed "the pent-up interest in crypto."
According to Fink, Monday's rally suggested investors are seeking "a flight to quality" caused by fears of further global unrest.
"I think there's more people running into a flight to quality, whether that is in Treasuries, gold or crypto, depending on how you think of it. And I believe crypto will play that type of role, as a flight to quality," The BlackRock CEO said.
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